India becoming too expensive for tech firms
Have to find somewhere cheaper to exploit
OUTSOURCING TO INDIA may soon become a thing of the past for small to mid-sized technology firms, due to the increasing costs of rent, salaries and a looming end to the government’s tax holiday.
India’s technology, and especially software industry, has seen spectacular growth over the last few years, tripling in size to reach an astounding $52 billion. But it seems that the bubble may be about to burst.
The slowing US economy is having a big impact on India’s future as a market for outsourced business, with foreign firms tightening their belts as India’s currency strengthens, and operational costs soar, not to mention the fact that skilled manpower is becoming scarcer, and those available are demanding higher salaries. To add to tech companies’ concern, the government tax policy is also looking a bit uncertain.
Sankaran P. Raghunathan, president at the IT SME Association, an umbrella for 3,200 small to mid sized IT firms, told the WSJ's Marketwatch, "operating in India has become extremely difficult because of the government's fiscal policies."
He added that under the current Indian tax laws, software companies can take advantage of a tax holiday for income they make out of products manufactured at designated software-technology parks, which lowers taxes to between 12 and 15 per cent, as opposed to peak corporate tax, which stands at 33 per cent. But the tax legislation is nearing expiry in a year’s time, leaving an uncertain future ahead.
Big companies won’t necessarily be as affected as their small counterparts however, because they can take advantage of legislation allowing them to set up their own special economic zones, where they can keep their taxes to a level of between 18 and 22 per cent.
President of Nasscom, another umbrella organisation, Som Mittal, said in a statement that the industry hasn't yet given up hope for the government to extend the tax holiday, saying “we believe the government appreciates the issues that are there, and we still have one year to get this going."
Still, until the future looks a bit less shaky, foreign firms might have to consider relcocating somewhere cheaper than India. µ
Comments
Here's an idea
Here in JesusLand, we're well on our way to becoming a third-world banana republic. Maybe with the rising costs of doing business in India we'll be able to get some jobs back!After years of republican economic "policy" the dollar is well on its way to being worth less than the rupee anyway.
How about the US?
The way things are going now, it won't be long before the average American will work for less then the average Indian. I'm not gloating; I'm an American myself who works for peanuts in IT. Seriously. I make next to nothing and some of these Indian IT guys sure seem rich to me.Haha! What goes around comes around I guess.
I clean up the mess still anyway.
Speaking as someone who has to clean up the mess that India outsourcing causes anyway. I don't see what money the companies who do outsourcing are actually saving?I have done now three different cost analysis on my companies situation and my company is spending 1/4 more now that we outsource to India (due to having to pay higher salaried US engineers to clean up the mess made by poorly trained India outsourced engineers) than we were having to pay when we did things with just US employees alone.
Not trying to discredit anyone from India, I realize the issue is that once an Indian employee actually becomes a good tech, they move on to better more higher paying jobs with different companies and that the person that filled that techs position that left are unqualified. It's the "churn" going on in those outsourcing companies that is the problem.
The worst part... some US VP or middle manager who suggested outsourcing in the first place got a raise and a bonus, and I have to clean up for his lack of vision.
The outsourcing needs to stop.
West IS Greed.
Stable Economies eg: Japan, China & Mexico have RED Star on each Note, While here in US, Dollars are Printed on Xerox Machine, its Easier.Try Indias Tech support or Activation for taste o' Greed. People just don't have idle time to look at: BIG Picture. Its Break Neck World.
Greed kills Congo, Greed kills Church, Greed will Kill You. Fostering NEW Plan that makes Cheese where Cows Abound in agri wealth & taking mutant teenage ninja turtles to Clean Desert Room to Learn, call it: MASADA of Sharon, albiet, prosties of cheapist order. Price is Where you Ganner it.
Some Cultures just Cut Cheese Longer, Better & More Succesfully than Flash N' Pan, Hot Today then NOT.
Rules that Guide at NO Expense Externally Help.
England could of Used such Hands Off Policy.
Greed kill rest of island, & that atheist tribe:GOD. God of State, NOT People?
Holy Cow, BAD Man.Its Shivers for US.
T.drashek
Bring the jobs home!
The US needs them. Bring them home. If we can't make it in the US, we don't need it. Pump oil from Alaska. Bring the soldiers home. Close the shores. Let our military guard OUR shores. It's time to worry about us and our few real friends, our two neighbors to the north and south - Canada and Mexico, England, Australia, hmmm - that may be it. God Bless the USA.Retired IT Manager
Sure glad I took the buyout back in 2000. Not having to fix someone's else's mess is nice.I know lots of people that won't buy Pc's if the Tech Support is based Overseas.
Even my Mom won't accept an Dell anymore. It may be English they are talking but loses something....
SFD
Bringing them up
Eventually this will happen with China too, although it may take longer. These countries may be bringing out salaries down to some extent, but we are raising theirs much faster. When they are equal most of this outsourcing bonanza will stop.It is the way to steal money
Outsourcing is a very sophisticated method to steal investor's and taxpayer’s money. Period.Blame Wall Street
Axiomatic, you're looking at the wrong metric. It's not about saving money.Outsourcing allows you to cut your headcount.
A lower headcount makes your revenue (turnover) per employee look better.
Wall Street likes this particular metric.
I would sure like to meet up with the analyst who came up with this metric in some dark alley sometime.
outsourcing will kill US
if all companies starts outsourcing US citizenswill affect by jobshortage. then the profit of those companies doing outsorcing will definitely reduce as end consumers who lose jobs cannot afford the products. if it is not the endproducts also in next line it will affect. So Outsourcing in mass is not recommendable.
Economic Reality
Re: cybersaur said " After years of republican economic "policy" the dollar is well on its way to being worth less than the rupee anyway".You mean the economy that tanked 9 months BEFORE GW took office?? It has been in the dumps ever since, but he didn't put it there. (check the real history rather than the popular version of history)
recession bad, recovery good
Where do they have in mind then? Somewheres in Africa? The North Pole?Surely they've almost run out of places with workers to exploit. The next move following the upcoming move will likely be the one back home, as by that time people will be literally begging for work, so they'll accept really bad pay standards.
'will work for a new pen to finish my si'
More seriously, it does say 'uncertain', so maybe the tax laws will just stay the same or similar.
Pop it
Pop the rent and then the life fizzles out of the IT tech. Many other ones would be willing to accept the gloat of fornicators but that's the price we pay in this modern economy.Wheel it around and deal me an ace cause I'm sticking around to play the game.
to hell with u nay sayers..
to hell with all u.. dooms day nay sayers... ur wishful thinking of the end of the indian industry is pitiful.. even as india is outgrowing IT in terms of other sectors and buying up ur companies in Iron and stell automobile etc. U keep cribbing about wages and still not having the urge to do quality work.. u will just keep cribbing and ranting.. even as india and other hard working smart third world countries keep developing..we are outsourcing now...
we just did a deal with an indian outsourcing outfit... guess what they are charging us... $75/hr per person...they will come 'on-shore' for 90 days and heading straight back to india...
i don't even make $75/hr.... gawd.
yeah yeah
keep complaining about outsourcing. i'm sure globalization and multinational corporations will be sputtering out any day now. maybe we should shut down the internet too, just to be sure.India becoming too expensive for tech firms
Say what you want guys. I am an Indian and my boss asked me 4 yrs ago, if I would go to India and train people over there if they would set up a call center. I flatly told him no, I did not want our jobs to be shipped offshore. My company also found out that the cost of outsourcing to India was expensive. But lately they are setting up a call center in Philippines and they want to make sure it's a success this time. The importance of reducing cost is on everybody's mind these days. I don't care who comes to the Whitehouse, no one can stop this flow. We better educate ourselves everyday and make higher education a part of everyday life, so that we can move on to better things in life. Oh, btw, I am going to Philippines for 2 months..can't stop it, let me just enjoy it...Indian say's what!!
I about agree with every one on the subject i am an indian who works in IT but also do part time import export and i must say that my job as a expoter is about dead american people are just no buying....!!!!Anyway, most countries who have friendly relations with each other tend to affect each others economy...India's economy has been affected greatly by the $ downfall. BTW this whole $ downfall was not because of OUT-sourcing only many other factors were involved. P.S. U KNOW THE INDIA WORKERS DON'T EVEN GET DENTAL ??
This has to STOP !!!
Hey folks,I have trying to tell this to my fellow country men for a long time. Having lived both in the US and in India, I know the economic conditions of the majority of the population. Well, IT and related services probably employ about 10Mil people, and thats definitely a high estimate. With over 1 billion people out there that about 1% of the total population. Actually even in India they are not really representative of what India is. Having said that Americans have their own problems, they would like have free trade - that gives their products and services unrestricted access to the worlds markets, but when it comes to things that are advantageous to other countries they are not so free minded.
But, hey who does not want to have their cake and eat it too. If India was in the same position we would want it too. So, it is upto the folks in India to realise that it is important to develop the local economy and rely on American businesses. But who hear me, its too much easy money.
But, let me ask you this. If you do not want American companies to outsource jobs, you probably will want to be fair and say - "hey", you should not be selling there too. Its OK for those governments to put up tariffs that make it harder for other countries to buy American products. Is that OK....
by a random indian
not soon
alot of companies go to south africa and the philippines. so no chance of jobs returning anytime soon.Pakistan, Vietnam viable options
This is actually old news.India has risen in cost alot (mainly happened in 2006).
The problem for sending work to other countries is no one is as prepared to do the work as India.
India has such a deep pool of talent its hard for Vietnam, Pakistan, China, Columbia, Brazil (its also very expensive) to pick up the slack.
But they will eventually probably in about 5 years from now those counties will be the first place for low value added stuff like English-language call centers, basic design, etc.
Exploitation?
Why call it exploitation? Outsourcing IT has been hugely positive for India, raising standards of living and giving people more choices.I don't see this problem
I really think it's bull! If you're really serious about outsourcing, then you're ready to invest into longterm relationships.And if you are willing you can still find prices < 15 Euro's per hour. And if you have a strong proposition, like letting them work with the latest Java technologies, you can get real enthusiasm and willingness.
We're talking about a country that still has hundreds of million of people without a job. And believe me that many want to work, espescially in IT. Just broaden your horizon and go past Mumbai, New Delhi and Bangalore and you will find more people.
Death of Indian Outsourcing
Read this:http://sramanamitra.com/2008/01/22/death-of-indian-outsourcing/
Death to outsourcing
Outsourcing is the biggest con of the 21st century.Companies will throw out their best people in a blink to reduce head counts and improve their metrics.....then.... when the price of outsourcing goes up it all comes crashing down.
These IT guys in India, China and Russia aren't dumb. They're not going to work for peanuts forever before asking for serious cash.
In the meantime the companies have realised that outsourcing is no longer viable so they decide to bring the work back in-house again. Problem is, they've just screwed over all their best people, lost a lot of knowledge and talent with it and left a sour taste in the mouth of former employees who wouldn't go back anyway.
The middle manager with the bright idea of outsourcing has probably already got his huge pay increase is now pushing inhouse teams as his new idea to make money again.
Bring the jobs back. Here here. And sack any person who mutters the word outsourcing in your business. It'll save you pain and money in the long run.
Keep up the comments and watch the rest of the jobs go away too!
All you complainers - get real. Your companies are not fools or anti-UK to send the jobs outside. The UK is a capitalistic society and the market will decide where the jobs go. If India also decides that they do not want British Aerospace and other high tech products and services - guess who will lose jobs. Just as the UK market is free to choose goods and services from anywhere in the world, India also does the same (after all, we go English and learning from you guys anyways :)Go Home
Yes, I agree with all of you. Bring your IT industry back to the States, as well as your army.Irak and the rest of thw world would be safer.
I can smell it, it's the end of the USA era...